A little perspective on iPhone competition, and what it means for Palm

[dandbj13]

I wrote this up at Appleinsider, so it might look familiar to those who swing both ways.

In case you haven't heard, Samsung sold a million Galaxy S phones in the first month and a half. Those aren't iPhone numbers, not even close, but not bad. Does that mean Android is finally catching up in sales as well as hype? Let's take a closer look at the numbers.

First, wake me up when a competing product sells a million in the first couple of days. The Galaxy S sells at less than one-tenth the rate of the iPhone, and we are supposed to be impressed? What am I missing? Why should this even be considered news? It is only meaningful in the realm of low expectations which is Android. For this to be news, you have to pretend that the iPhone does not exist. There was a time when a million sales in 45 days was newsworthy. Now, it is just pathetic.

Second, the Galaxy S is not a phone; it is a series of 4 phones on different carriers, each, slightly different. In this case, the numbers are from the two phones that are available from AT&T and T-Mobile. Combining the total number of sales from multiple phones to compare them against one phone doesn't seem completely honest or fair. Then again, we've seen this trick before.

Finally, the biggest con is that a million Galaxy S branded phones were "sold" at all. The sad fact is during much of that time, both phones could be had for free with contract. Even now, you can get them for free. Let me be clear, THESE ARE FREE PHONES! We will likely never know the number of phones they actually "sold". These types of sales announcements try to blur the difference between premium phones and free phones. How many iPhones could be given away for free with contract? Hint, Asia does not have the manufacturing capacity to find out. It does little good to compare the number of people lined up at a free soup kitchen and the number of people lined up at Ruth's Chris. Once you start giving your stuff away for free, you are not playing the same game anymore. You just as well stop keeping score.

When the headlines first hit the wire, these facts were not given the column inches needed for a clear perspective on the subject. The Galaxy S does not represent a change in iPhone competition; it just represents a shift in how sales numbers are massaged. I am still waiting for the first, real iPhone competitor.

As for the implications for Palm, I think it's clear that Palm has to play exclusively in the free phone arena. In a comment I made some time ago, I suggested that Palm would have that arena all to themselves. That was clearly wrong. Android is the new free phone, with pretensions of being in the premium market.

I am now convinced that no phone can sell against the iPhone at the $200 pricepoint. Everyone that has tried has failed. And every competing product that has succeeded has done so for free or heavily discounted. It doesn't matter what HP produces, at a competitive price with the iPhone, it will fail. Still, if "sold" for free and marketed just right, it could definitely give the Galaxy S a run for its money.

[gmanvbva]

Originally Posted by dandbj13

I wrote this up at Appleinsider, so it might look familiar to those who swing both ways.

In case you haven't heard, Samsung sold a million Galaxy S phones in the first month and a half. Those aren't iPhone numbers, not even close, but not bad. Does that mean Android is finally catching up in sales as well as hype? Let's take a closer look at the numbers.

First, wake me up when a competing product sells a million in the first couple of days. The Galaxy S sells at less than one-tenth the rate of the iPhone, and we are supposed to be impressed? What am I missing? Why should this even be considered news? It is only meaningful in the realm of low expectations which is Android. For this to be news, you have to pretend that the iPhone does not exist. There was a time when a million sales in 45 days was newsworthy. Now, it is just pathetic.

Second, the Galaxy S is not a phone; it is a series of 4 phones on different carriers, each, slightly different. In this case, the numbers are from the two phones that are available from AT&T and T-Mobile. Combining the total number of sales from multiple phones to compare them against one phone doesn't seem completely honest or fair. Then again, we've seen this trick before.

Finally, the biggest con is that a million Galaxy S branded phones were "sold" at all. The sad fact is during much of that time, both phones could be had for free with contract. Even now, you can get them for free. Let me be clear, THESE ARE FREE PHONES! We will likely never know the number of phones they actually "sold". These types of sales announcements try to blur the difference between premium phones and free phones. How many iPhones could be given away for free with contract? Hint, Asia does not have the manufacturing capacity to find out. It does little good to compare the number of people lined up at a free soup kitchen and the number of people lined up at Ruth's Chris. Once you start giving your stuff away for free, you are not playing the same game anymore. You just as well stop keeping score.

When the headlines first hit the wire, these facts were not given the column inches needed for a clear perspective on the subject. The Galaxy S does not represent a change in iPhone competition; it just represents a shift in how sales numbers are massaged. I am still waiting for the first, real iPhone competitor.

As for the implications for Palm, I think it's clear that Palm has to play exclusively in the free phone arena. In a comment I made some time ago, I suggested that Palm would have that arena all to themselves. That was clearly wrong. Android is the new free phone, with pretensions of being in the premium market.

I am now convinced that no phone can sell against the iPhone at the $200 pricepoint. Everyone that has tried has failed. And every competing product that has succeeded has done so for free or heavily discounted. It doesn't matter what HP produces, at a competitive price with the iPhone, it will fail. Still, if "sold" for free and marketed just right, it could definitely give the Galaxy S a run for its money.

How are the Galaxy S phones free (not sold)???

The first two Captivate (AT&T) and Vibrant (T-Mobile) are $199. The Epic (Sprint) released at $249 and I'm sure the Fascinate wont be free on Verizon.

Even if they were "free" they would still be "sold" w/ a contract and likely a rebate... So why would that impact "sales" figures?


And

Originally Posted by dandbj13

Android is the new free phone, with pretensions of being in the premium market.

Umm... You seem to have some pretty heavy bias going on for Apple. Android is selling numerous "premium" smartphones at the highend. And nearly all of them are selling faster than they are produced. In fact, the high-end Android phones are selling better then the low-mid range Android phones...

[mikah912]

Originally Posted by dandbj13

I wrote this up at Appleinsider, so it might look familiar to those who swing both ways.

In case you haven't heard, Samsung sold a million Galaxy S phones in the first month and a half. Those aren't iPhone numbers, not even close, but not bad. Does that mean Android is finally catching up in sales as well as hype? Let's take a closer look at the numbers.

First, wake me up when a competing product sells a million in the first couple of days. The Galaxy S sells at less than one-tenth the rate of the iPhone, and we are supposed to be impressed? What am I missing? Why should this even be considered news? It is only meaningful in the realm of low expectations which is Android. For this to be news, you have to pretend that the iPhone does not exist. There was a time when a million sales in 45 days was newsworthy. Now, it is just pathetic.

Second, the Galaxy S is not a phone; it is a series of 4 phones on different carriers, each, slightly different. In this case, the numbers are from the two phones that are available from AT&T and T-Mobile. Combining the total number of sales from multiple phones to compare them against one phone doesn't seem completely honest or fair. Then again, we've seen this trick before.

Finally, the biggest con is that a million Galaxy S branded phones were "sold" at all. The sad fact is during much of that time, both phones could be had for free with contract. Even now, you can get them for free. Let me be clear, THESE ARE FREE PHONES! We will likely never know the number of phones they actually "sold". These types of sales announcements try to blur the difference between premium phones and free phones. How many iPhones could be given away for free with contract? Hint, Asia does not have the manufacturing capacity to find out. It does little good to compare the number of people lined up at a free soup kitchen and the number of people lined up at Ruth's Chris. Once you start giving your stuff away for free, you are not playing the same game anymore. You just as well stop keeping score.

When the headlines first hit the wire, these facts were not given the column inches needed for a clear perspective on the subject. The Galaxy S does not represent a change in iPhone competition; it just represents a shift in how sales numbers are massaged. I am still waiting for the first, real iPhone competitor.

As for the implications for Palm, I think it's clear that Palm has to play exclusively in the free phone arena. In a comment I made some time ago, I suggested that Palm would have that arena all to themselves. That was clearly wrong. Android is the new free phone, with pretensions of being in the premium market.

I am now convinced that no phone can sell against the iPhone at the $200 pricepoint. Everyone that has tried has failed. And every competing product that has succeeded has done so for free or heavily discounted. It doesn't matter what HP produces, at a competitive price with the iPhone, it will fail. Still, if "sold" for free and marketed just right, it could definitely give the Galaxy S a run for its money.

Um, with all due respect, you are wrong, wrong, wrong, wrong, wrong.

Well, inaccurate, too.

First off, the "free" canard is ridiculous, as I have told you before. These offers come from third party resellers for a limited time and are for new customers to a carrier only. The vast majority of sales from any flagship device - including and especially the iPhone 4 - are from existing customers who are upgrading. They do not get "free" "$.01" pricing. They pay pretty much what the carrier charges. You can get a Vibrant from Amazon for $50 with a NEW service plan. It is $150 if you are an existing customer, and that is only because of the additional Amazon subsidy applied to pretty much ALL phones that they sell. If you want to see that in action, try buying a phone from Amazon, cancelling service in 60 days or so, and watch the additional hefty ETF get levied to you by Amazon on top of what T-Mobile will charge you.

For the vast majority of customers, they will buy it from T-Mobile online or from a authorized reseller or T-Mobile B&M outlet, where the price is and will remain (for the foreseeable future) $199.

Furthermore, it is silly to dismiss competition simply because they cannot reproduce a phenomenon, which by its very nature...is nigh irreproducible! Yes, the iPhone was and is a phenomenon. But thus far it has been one in a relatively small pond in America. The vast majority of wireless customers remain on other carriers, and Verizon continues to add more phone customers per quarter than ATT does because it offers a superior lineup. The iPhone is not the be all, end all. It is a very appealing and polished phone to a large mainstream audience, but there is plenty of room for competition and they don't need to have a single device that sells equally. Verizon has proven they can outgrow ATT without it, and Motorola and HTC are simply trying to meet the demand for their products. Samsung is now rising to that level.

God bless Apple. They kicked this industry in the pants when it needed it most, and now there are finally companies kicking back, including Palm/HP. We win, no matter who else does.

[dandbj13]

Originally Posted by gmanvbva

A few things I would disagree with.

How are the Galaxy S phones free???

The first two Captivate (AT&T) and Vibrant (T-Mobile) are $199. The Epic (Sprint) released at $249 and I'm sure the Fascinate wont be free on Verizon.

I thought about posting links, but the information is readily available. Google the Captivate and Vibrant for free. Enjoy the results. Walmart Amazon, and Wirefly have been selling them for free, or close to free. Still are. Even Tmobile dropped the price to $99 for a day or two to boost sales. You are free to disagree with my conclusions, but the facts are what they are.

[mikah912]

Originally Posted by dandbj13

I thought about posting links, but the information is readily available. Google the Captivate and Vibrant for free. Enjoy the results. Walmart Amazon, and Wirefly have been selling them for free, or close to free. Still are. Even Tmobile dropped the price to $99 for a day or two to boost sales. You are free to disagree with my conclusions, but the facts are what they are.

With all due respect, facts without context can be just as deceptive as outright lies.

See above.

[gmanvbva]

Originally Posted by dandbj13

I thought about posting links, but the information is readily available. Google the Captivate and Vibrant for free. Enjoy the results. Walmart Amazon, and Wirefly have been selling them for free, or close to free. Still are. Even Tmobile dropped the price to $99 for a day or two to boost sales. You are free to disagree with my conclusions, but the facts are what they are.

Oh I think most know you can find just about any phone cheaper through other "channels" but as mentioned most will buy them direct from a carrier or at least from a wireless store (BB, Radio Shack, etc.).

It's also pretty deceptive (and pointless) to use those other channels as a basis for comparison and completely ignore the primary means in which the units will be sold.

EDIT: And your primary point seemed to be that this lead to some type of "massaging of sales numbers"... Which they are definitely still "sold" and in most cases just further subsidized.

Again, you understand that the EVO, EPIC, Droid Incredible, Droid X, etc. are all selling as fast as they are produced? And a large majority of those phones are selling through carriers. The carriers themselves can't even keep them in stock...

[dandbj13]

Originally Posted by mikah912

With all due respect, facts without context can be just as deceptive as outright lies.

See above.

There is no deception. You can't make free with contract equal to $200 with contract. What percentage of the free phone crowd would you say are Walmart shoppers? The more tech savvy bargain hunters go to Amazon, and everyone knows about Wire Fly. How are these minor players in cell phone distribution?

The fact is, you have no idea how many units were actually sold as opposed to given away for free with contract. Samsung sure isn't saying, nor Google, nor the carriers, nor anyone else who would actually know. Still I don't see how any of this side argument about free vs. sold for money has anything to do with my conclusion.

[cardfan]

Personally, i think Apple peaked with the iphone 4. It's been a killer ride for Apple though who could do nothing wrong until antenna gate. I'd be very surprised if they can keep this ride going without making some changes.

Will AT&T keep making everyone upgrade eligible? They did for iphone 4.

Especially as other platforms catch up in apps, eye candy, UI, and hardware that already have OS's with more potential.

Its important to remember that devs are important. Palm and others simply need to make devices that devs want to use and cater to them. I've seen many a dev who can't stand Apple but only stick with them because of the hardware. Apple is just too controlling and $$$ minded. That will bite em.

Here's a small example. Apple will enable AVRCP finally with 4.1. What was the holdup? IMO, its because they now have a $$$ reason for doing it. Guess we'll see tomorrow.

[gmanvbva]

Originally Posted by dandbj13

There is no deception. You can't make free with contract equal to $200 with contract. What percentage of the free phone crowd would you say are Walmart shoppers? The more tech savvy bargain hunters go to Amazon, and everyone knows about Wire Fly. How are these minor players in cell phone distribution?

The fact is, you have no idea how many units were actually sold as opposed to given away for free with contract. Samsung sure isn't saying, nor Google, nor the carriers, nor anyone else who would actually know. Still I don't see how any of this side argument about free vs. sold for money has anything to do with my conclusion.

You also cant classify all of these phones as "free phones"...


HTC EVO
HTC Droid Incredible
Motorola Driod 2
Motorola Driod X
Samsung EPIC
Samsung Captivate
Samsung Vibrant

...Because one or two were offered for free for a brief period.
Why do you completely ignore the fact that the carriers can't even keep most of those models in stock consistently while selling them at "full price"?

Also, are you just playing ignorant or what?

I'm pretty sure there is still a "sale being made" when you purchase a phone for "free" and any remotely competent retail business can track the units they have "sold"...

[mikah912]

Originally Posted by dandbj13

There is no deception. You can't make free with contract equal to $200 with contract. What percentage of the free phone crowd would you say are Walmart shoppers? The more tech savvy bargain hunters go to Amazon, and everyone knows about Wire Fly. How are these minor players in cell phone distribution?

The fact is, you have no idea how many units were actually sold as opposed to given away for free with contract. Samsung sure isn't saying, nor Google, nor the carriers, nor anyone else who would actually know. Still I don't see how any of this side argument about free vs. sold for money has anything to do with my conclusion.

Surely you jest. First, you are acting as if you know how many units were actually sold as opposed to given away free with contract because it's one of the central points of your argument!

Second, ATT said in their last earnings statement that 27 percent of their 3 million iPhone activations for the quarter were for new customers. Barely 1/4 of all sales.

Are you suggesting that less "awesome" and "phenomenal" handsets like the Samsung Galaxy S are actually MORE appealing to customers at other carriers than the iPhone, and so a higher percentage of their sales are from new customers? Please.

I repeat: The vast, vast, vaaaaaaaast majority of people purchasing any flagship handset from the iPhone 4 to the Droid X to the Evo to any Galaxy S device are pre-existing customers paying the full asking price. There is no exception to this rule. In some cases, they are paying higher because they are not eligible for a full upgrade or any upgrade whatsoever and are selling off last month's hot handset to pay for this this month's.

[yaggermr]

Second, the Galaxy S is not a phone; it is a series of 4 phones on different carriers, each, slightly different. In this case, the numbers are from the two phones that are available from AT&T and T-Mobile. Combining the total number of sales from multiple phones to compare them against one phone doesn't seem completely honest or fair. Then again, we've seen this trick before.

Who cares samsung is a company competing in a market all there sales count. They make money on "free phones" the carriers eat cost cost on the plan. If they sell fifty different phones and outsell apple great for them. Apple has chosen to make one phone (not really different memory and selling price) good for them but in the marketplace there's no rule about making different models for different consumers. As for your multiple carriers argument it's flawed too. Apple decided on exclusivity agreement which allowed android to be successful. Samsung decides to sell there phones on multiple carriers good business move. Last many phones have had great success at the $200 price range. Maybe not iphone numbers but htc sells hundreds of phones they don't need every one to sell like the iphone.

[dandbj13]

Originally Posted by mikah912

Are you suggesting that less "awesome" and "phenomenal" handsets like the Samsung Galaxy S are actually MORE appealing to customers at other carriers than the iPhone, and so a higher percentage of their sales are from new customers? Please.

Yes. No phone has the customer satisfaction and repeat buyer percentage as the iPhone. The numbers are not even close. A much larger percentage of Android customers say they would not buy another Android phone compare to iPhone customers. So, yes. There would be a higher percentage of new customers buying Android phone, especially the price-consience, first-time smartphone buyer who looks at their options and sees they can get a hyped up superphone for free.

Also, you seem to ignore the fact that the smartphone market is growing exponentially. It will not be defined by the current users, but the new users. Targeting new users with free phones is targeting the growth market. Android is definitely growing by offering free phones to the largest market: those new to smartphones. Verizon, or Moto, can't remember which one, admitted as much. I'll try to find the link later.

[barkerja]

Originally Posted by cardfan

Personally, i think Apple peaked with the iphone 4. It's been a killer ride for Apple though who could do nothing wrong until antenna gate. I'd be very surprised if they can keep this ride going without making some changes.

Will AT&T keep making everyone upgrade eligible? They did for iphone 4.

Especially as other platforms catch up in apps, eye candy, UI, and hardware that already have OS's with more potential.

Its important to remember that devs are important. Palm and others simply need to make devices that devs want to use and cater to them. I've seen many a dev who can't stand Apple but only stick with them because of the hardware. Apple is just too controlling and $$$ minded. That will bite em.

Here's a small example. Apple will enable AVRCP finally with 4.1. What was the holdup? IMO, its because they now have a $$$ reason for doing it. Guess we'll see tomorrow.

Actually, they didn't make everyone upgrade eligible. I'm not particularly sure on the details, but I know my mother and sister weren't eligible for an upgrade, and they were over a year into their contract.

[gmanvbva]

Originally Posted by dandbj13

Yes. No phone has the customer satisfaction and repeat buyer percentage as the iPhone. The numbers are not even close. A much larger percentage of Android customers say they would not buy another Android phone compare to iPhone customers. So, yes. There would be a higher percentage of new customers buying Android phone, especially the price-consience, first-time smartphone buyer who looks at their options and sees they can get a hyped up superphone for free.

Also, you seem to ignore the fact that the smartphone market is growing exponentially. It will not be defined by the current users, but the new users. Targeting new users with free phones is targeting the growth market. Android is definitely growing by offering free phones to the largest market: those new to smartphones. Verizon, or Moto, can't remember which one, admitted as much. I'll try to find the link later.

You continue to ignore nearly every rational point and are simply choosing to spin small facts while taking them out of context.

BTW (again) where are all of these "hyped up superphones" for free?

[hparsons]

Here's what you said:

Originally Posted by dandbj13

...
Finally, the biggest con is that a million Galaxy S branded phones were "sold" at all. The sad fact is during much of that time, both phones could be had for free with contract. Even now, you can get them for free. Let me be clear, THESE ARE FREE PHONES! We will likely never know the number of phones they actually "sold". These types of sales announcements try to blur the difference between premium phones and free phones...

And that's simply hogwash. Your information is simply false. Every phone that is "free with a contract" is sold, so your first statement is incorrect. The "had for free with contract", obviously is correct, but the next is all a bunch of baloney. "Free with contract" is not "free". That's why you can get a Palm Pixi for $0 if you sign a contract, but have to pay money if you want it without.

[dandbj13]

Originally Posted by gmanvbva

BTW (again) where are all of these "hyped up superphones" for free?

Amazon, Walmart, and Wire Fly. You know, the places where price sensitive, new to smartphone consumers go to shop for such things. What part of this are you not getting?

[gmanvbva]

Originally Posted by dandbj13

Amazon, Walmart, and Wire Fly. You know, the places where price sensitive, new to smartphone consumers go to shop for such things. What part of this are you not getting?

Yeah... but I'm not finding any of them for free.

Cheapest is the Captivate at $49 at Walmart... and $0.01 at Amazon!!!

Again... where can I find one for free?

It should be pretty easy if they are all "free phones". Right?

EDIT: BTW I know exactly ZERO people (personally) that would be "new to smartphone consumers" that would purchase a phone from Walmart, and especially from Amazon and Wirefly. This type of user almost always ends up in a carrier store or something along the lines of BB mobile. So that kinda ruins your theory as well.

What part of this are you not getting?

[hparsons]

Originally Posted by dandbj13

...Android is definitely growing by offering free phones to the largest market: those new to smartphones. Verizon, or Moto, can't remember which one, admitted as much. I'll try to find the link later.

Except, Android doesn't market anything, or offer anything for free (except Android itself).

That's why your whole "perspective" is completely bogus. Right now, if you're talking about iPhone, you're talking about the offerings of one single entity - Apple (yes, I know AT&T is in the mix, but currently, Apple dictates the terms).

Android is free.

The phones are sold the service providers. They are not free.

Some of the phones are offered for "free" by the service providers (or their agents), if a contract for several hundred dollars is signed, frequently in exess of $2K.

[dandbj13]

Originally Posted by hparsons

"Free with contract" is not "free". That's why you can get a Palm Pixi for $0 if you sign a contract, but have to pay money if you want it without.

Now, you are just trying to change the definition of commonly used terms. Of course, a free phone costs something if you don't have a contract. But that has always been true. We have always called a phone "free" if you do not have to pay anything for the hardware upfront, as in point of sale.

Also, free phones have always been considered downmarket from premium phones. Now that we have something like an iPhones\, people want to blur the line between free phones and premium so that they can have the appearance of competing.

I don't know about today's world. But in the one, say, three years ago, the "sales" of free phones were not compared to premium phones. I am not the one changing the definition of words to suit my position.

[mikah912]

Originally Posted by dandbj13

Amazon, Walmart, and Wire Fly. You know, the places where price sensitive, new to smartphone consumers go to shop for such things. What part of this are you not getting?

What part of "No carrier is adding millions of customers per quarter, despite selling millions of these smartphones each quarter" are you not getting?

You seem to have a rather shoddy understanding of how this business works. If you think Verizon outgrowing ATT each quarter and HTC and Motorola selling virtually every high end device they can make connotes "disappointment" or "failure" relative to iPhone and ATT, then there is nothing more to be said. This is the sort of craziness that ensues when one starts with a conclusion and works backward to support it at all costs.